When your attorney files your bankruptcy petition, a bankruptcy estate is created. A bankruptcy estate generally includes all of your assets, although some property is not included. Unfortunately, any interest in property that comes to you from an inheritance within 180 days of filing bankruptcy may become part of your bankruptcy estate.
Section 541(a)(5)(A) of the Bankruptcy Code provides that “[a]ny interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date by bequest, devise, or inheritance.”
Unless the inheritance is exempt, the trustee may take the property, auction it off, and use the proceeds to pay your creditors.
This is not an entirely clear cut issue, however. There is some disagreement as to when an inheritance becomes part of the estate at the time you actually receive the property or at the death of the person who has bequeathed the property. If you have any questions about inheritance and bankruptcy, you should contact a Colorado bankruptcy attorney.